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The World Bank’s Poverty Reduction and Economic Management Department (ECSPE) in the Europe and Central Asia (ECA) Region handles the region’s work on economic policy, public sector management and governance, social inclusion, and access to equal economic opportunities. The ECA region comprises 30 highly diverse client countries, with a total population of nearly 500 million people. The region spans European Union (EU) member states and accession countries; middle-income countries in the Commonwealth of Independent States and the Western Balkans; resource-rich countries such as Russia, Azerbaijan, and Kazakhstan; and poor and fragile states such as Tajikistan and Kyrgyzstan. Though ten of our clients have joined the EU, most continue to remain active knowledge-sharing partners and/or recipients of lending services.
THE CHALLENGE Despite the significant diversity in ECA, policy makers in our
ECA clients are cutting social spending as part of fiscal con-
the global economic crisis. The crisis has unveiled key short-
coverage and targeting of this spending to ensure adequate
client countries face some common challenges in the wake of comings of the European growth model, which are putting
pressure on the region’s global competitiveness. These include
solidation efforts, the immediate challenge is to improve the safety nets for poor and vulnerable people.
business regulations, eroding labor force skills, sluggish pro-
3
challenges center around three common themes:
remains the most energy-intensive region in the world.
weak fiscal positions, strained financial sectors, cumbersome ductivity, and aging infrastructure. Policy responses to these
1
Reforms for Improved Competitiveness These reforms include restoring the health of public
finances, stabilizing the financial sector, improving the business climate, enhancing governance, and investing in infrastructure and education.
2
Energy Efficiency and Climate Action for Sustainable Growth
Despite much progress in the past decade, ECA
Several countries in the region have defined energy efficiency strategies, targets, and/or reforms, in many cases in line with EU accession criteria. Analytical work is underway to better
understand options for mitigating the effects of climate change and encouraging greener growth.
Social Sector Reforms for Inclusive Growth
The ECA region is home to the world’s highest levels of social expenditure. Now that most
Our
oach ppr A
At ECSPE, we help our client governments understand the
We offer our clients a wide array of options for working with
formulate policy responses to address these challenges. Most
development policy operations, investment lending for
challenges posed by the current economic environment and importantly, our big-picture viewpoint allows us to help
integrate various sectoral reforms with a view to improving
competitiveness as well as sustainable and inclusive growth.
us toward these goals, including budget support through
specific projects, analytical and advisory support for reform programs, and fee-based services for clients interested in a knowledge partnership.
Development Policy Operations Development policy operations involve a customized dialogue
third loans were customized to align with the government’s
lenges. This dialogue results in direct budget support provided
slowdown and protect priority programs in education, health,
with the government to comprehensively address reform chal-
stepped-up efforts to mitigate the social cost of the economic
by the World Bank to help implement the agreed-upon reform
and social assistance. Many of ECA’s higher- and middle-
Development Policy Lending program for 2008–2010, totaling
to us for development policy support to address crisis-related
agenda. In Poland, for example, ECSPE has prepared a
income clients, including Latvia and Romania, have turned
€2.975 billion and comprising three loans that aim to acceler-
issues. We also use development policy operations to assist our
matic changes in the external economic environment between
and the Kyrgyz Republic, in tackling their long-term program-
ate Poland’s convergence with EU living standards. After drathe autumn of 2008 and the spring of 2009, the second and
lower- and lower-middle-income clients, such as Tajikistan matic development agendas.
Investment Loans Investment loans finance projects to improve public sector management:
Public financial management, including financial management information systems (FMIS) ECSPE helps governments design public financial manage-
inventory). Some projects in the region are working to develop integrated FMIS solutions to support a broader spectrum of
public financial management functions (including in Albania,
the Kyrgyz Republic, Moldova, the Russian Federation,
Turkey, and Ukraine).
ment reform projects to improve the strategic allocation of
Revenue administration reform
efficiency (to minimize waste and align spending with rev-
tax and customs administration by introducing modern risk
resources (to promote growth and reduce poverty), operational
Collecting revenues more efficiently involves modernizing
enues), and fiscal discipline (to improve the credibility of the
management, shifting to a functional rather than geographic
budget). Many of our current projects focus on developing
organization, customizing work with large taxpayers, and opti-
accounting, and reporting functions, linked with related public
ECSPE has prepared and implemented revenue administration
ment, procurement, human resources and payroll, assets and
higher-income clients (Czech Republic, Croatia), resource-rich
core FMIS solutions to support budget preparation, execution,
financial management systems (tax, customs, debt manage-
mizing human resources and information technology systems.
reform projects across the region, customizing solutions to
countries (Kazakhstan, Russia), middle-income countries
(Ukraine, Armenia), and low-income clients (Tajikistan).
Public administration reform
Administration Reform Project facilitated the consolidation of central public administration bodies around key policy areas.
As a result, the number of ministries was cut from 29 to 24 and the number of government agencies from 16 to 8. The reform
A well-functioning public administration is critical to com-
also helped strengthen the capacity of the ministries’ policy
our client governments assess and improve their institutional
Term Expenditure Framework supported through the parallel
their ministries and agencies, and design and implement civil
of public administration reform projects is flexible and often
petitiveness and socially inclusive growth. At ECSPE, we help
capacity for policy coordination, optimize the functioning of
service reform packages. In Moldova, for example, the Public
units to elaborate priorities and align them with the Medium-
Public Financial Management Project. In general, the design includes civil service reform (as in Armenia and Tajikistan).
Analytical and Advisory Work Analytical and advisory work can either underpin ECSPE’s
analysis, economic policy, urban development, and household
assist our client governments with customized diagnosis of the
a specific policy problem in a timely manner, especially during
development policy and investment lending operations, or
challenges they face and the policy responses best suited to
addressing them.
Growth diagnostics Growth diagnostics help policy makers identify constraints
to long-term sustainable economic growth and design policy
reforms to promote sustainable, equitable, and inclusive
stress testing. Shorter policy notes are ideally suited to solving
crisis and recovery phases.
Public expenditure analysis Public expenditure analysis examines trends in public spend-
ing, benchmarks them against patterns of expenditure in other countries, compares them with performance outcomes, and
provides practical recommendations for increasing efficiency
growth. Country Economic Memoranda (CEMs) include com-
and improving performance. Public expenditure analysis can
long term, and emphasize institutional and structural reforms.
the national or subnational (regional or municipal) level and
or the business environment. Policy Notes and Economic
transport, energy, social protection, agriculture, justice, or
prehensive cross-sectoral perspectives over the medium and
Some CEMs focus on thematic issues such as savings, trade, Updates are shorter variants of CEMs, highly focused and
timely, with more targeted and practical medium-term policy
recommendations in areas such as public expenditure, trade
be customized. For example, the analysis can be conducted at
can focus on specific sectors (such as education, health care,
public administration) where the government is interested in
improving efficiency and results.
Equity and inclusion analysis Analyzing equity, poverty reduction, and economic mobil-
ity can help governments improve the design, implementa-
where the government is interested in maximizing the positive impact of its projects and policies.
tion, and impact of public policies. A better understanding of
Economic analysis of climate change and green growth
policies that generate greater improvements in overall living
Economic analysis of climate change and green growth
vulnerable people. This analysis can focus on a variety of top-
“greening potential” in comparison with other countries. This
the determinants of welfare levels and changes can point to standards within a country, while also benefiting poor and
ics (including mobility and poverty trends; determinants of economic mobility, poverty, or social exclusion; and distri-
butional impacts of economic policies such as tax and public
spending or labor market reform) and deliver products ranging
from issue-specific policy notes to comprehensive assessments.
Diagnostics for access to equal opportunities Diagnostics for access to equal opportunities can identify
differences in access to resources and services among vari-
ous population groups, highlighting trends and inequalities
along specific socioeconomic dimensions. These diagnostics can outline effective mechanisms for the equal inclusion of
men and women in selected government policies, and provide practical recommendations for achieving gender-sensitive
policy outcomes. This type of analysis is a flexible product that
can be customized to focus on specific sectors (such as educa-
tion, health care, social protection, agriculture, or employment)
benchmarks an economy on key aspects of “greenness” and
analysis provides a toolbox of analytical approaches that can
be combined to address the most important issues within the
green growth agenda; fosters an economywide, macroeconomic
approach to a cross-sectoral challenge; and provides practical recommendations for key areas of action that will most
efficiently advance climate change approaches and “greening.”
The analysis is country-specific, focusing on issues that are of interest to the client government and relevant to the specific
economy. It proposes a range of realistic options for short-term, medium-term, and longer-term actions to lower carbon use
or increase the greening of growth, and refers to examples of
relevant experiences and good practices from other countries.
Fee-Based Services The above tools and approaches describe ECSPE’s engagement
In Kazakhstan, ECSPE leads the fee-based Joint
with countries where the World Bank has active lending pro-
Economic Research Program (JERP) to help the government
opment knowledge provider. Some of our higher- and upper-
priority. In 2010/2011, the JERP’s technical assistance and
grams. The World Bank is also recognized as a leading devel-
formulate its reform agenda in the areas of highest national
middle-income clients require development advice but do not
analytical work focused on strengthening public finance man-
fee-based services customized to meet individual client needs.
opment outcomes, mitigating macroeconomic and fiscal risks,
In Romania, ECSPE is engaged in a fee-based program
includes well-regarded high-level brainstorming sessions for
wish to borrow from the Bank. In such cases, ECSPE provides
of functional reviews focusing on public administration in twelve sectors. The reviews have helped guide structural
reforms by providing operational recommendations on strate-
gic management, organizational structure, sector governance, budgeting, and human resources management.
agement and public administration, improving human develand enhancing economic competitiveness. The JERP also
the government on key topics, including state-owned enter-
prise debt management, proactive social safety net programs
and policies to reduce informality, and intergovernmental
fiscal relations.
In the Czech Republic, ECSPE advised the government on the proposed merger of the collection functions of several agencies, including tax, customs, social security administrations, and health
insurance companies.
PE S C E
NER T R A AS P
ECSPE comprises approximately 115 World Bank staff mem-
bers, including economists, applied microeconomists, and public
sector, governance, and gender specialists. Of these, about 45 are located in country offices throughout the ECA region. ECSPE carries out a large and diverse work program of lending and
analytical work. The Department is composed of three macroeconomic groups, two thematic groups on poverty and gender, and a group dedicated to public sector management.
ECSPE teams bring together a wealth of international experi-
ence, sharing good practices from around the world, including
OECD countries and emerging economies. This global expertise is combined with the in-depth country-specific knowledge and
understanding brought by our local economists, who are an inte-
gral part of our teams. This blend of global and local knowledge
enables ECSPE to adapt global experience to the client country’s needs and circumstances, tailoring recommendations to account for the government’s priorities and political realities. We offer impartial, independent advice that policy makers can trust.
The World Bank Europe and Central Asia Region 1818 H Street, NW Washington, DC 20433 USA
tel: (202) 473-1000 fax: (202) 477-6391 www.worldbank.org
For further information, contact Armanda Carcani at acarcani@worldbank.org or (202) 473-0241.